Crafting beer for world's biggest market

Updated: 2013-05-03 11:32

By Caroline Berg (China Daily)

Slow Boat craft beer is produced at a microbrewery in Beijing that was opened by Chandler Jurinka and Daniel Hebert in 2011. Their craft brews include the Dragon Boat Ale, Monkey's Fist IPA and the Captain's Pale Ale. Provided to China Daily

China's microbrew enthusiasts are aiming for a revolution in the drinking habits of the most populous nation, reports Caroline Berg in New York.

Who wants to brew in an Eastern frontier?" read the ad. " Help us to teach China about beer."

The "Eastern frontier" is at the foot of the Himalayas and the job posted on Feb 20 on the Probrewer.com website was for a brewmaster at Bad Monkey Brewery in the popular tourist town of Dali in Yunnan, China.

Bad Monkey Brewery may be an anomaly in rural China, but it's part of a small yet nascent business: craft-beermaking in the world's most populous nation - and the biggest beer-drinking country.

"Our company has witnessed the changes in consumer preferences first-hand in China since 2003," Carl Oakley and Scott Williams, owners of Bad Monkey, wrote in a comment in response to a Wall Street Journal article about craft brewers collaborating in China. "[We have found] many Chinese drinkers who are adventurous enough and affluent enough to pay more for a tastier, higher quality brew."

Other craft-beer companies in China include Chengdu Beer and Harvest Beer in Chengdu, Sichuan province; Strong Ale Works in Qingdao, Shandong province; The Old Brewery in Yangzhou and Nanjing Craft Brewing Co in Nanjing, Jiangsu province. The strongest presence in the emerging craft-beer revolution is in Shanghai and Beijing, where six - soon to be seven - homegrown craft breweries exist.

"The craft-beer industry in China is without a doubt going to expand rapidly within the next five to 10 years," said Leon Mickelson, brewmaster at The Brew in Shanghai. "I see more and more craft-brew pubs opening up within Beijing and Shanghai, which will raise a lot more awareness and will ultimately benefit the industry as a whole."

The Brewers Association in the US says the hallmark of craft beer is innovation, where craft brewers interpret historic styles with unique twists and develop new styles that have no precedent.

Craft breweries compete on the basis of quality and diversity as opposed to large, mass-marketed breweries that more often value low prices and advertising.

The cost

What does a craft beer cost in China?

A bottle of local beer can sell for as little as 1.87 yuan (30 cents). Beijing-based Great Leap Brewing's rotating selection of 12 to 15 craft beers on tap sell for 25 to 50 yuan. The significant cost variation is due in large part to the lack of quality local ingredients and the need for craft brewers to import materials from all over the world.

Boxing Cat Brewery, Shanghai's first craft brewery that was established in 2008 and now has two locations, imports about 98 percent of its ingredients, according to brew master Michael Jordan. This is due to quality concerns.

"The imported ingredients are not cheap, and I reckon we're paying two to three times what breweries in North America are paying for the same materials," Jordan said. " 'Ouch' to say the least," he said, but to invest in anything other than '`top-shelf quality products would go against Boxing Cat's brewing philosophy".

Jordan also said that all the raw materials - including malts - aren't available to his brewery. Big brewers like Tsingtao and Yanjing use malts that are much different in specifications than what Jordan likes to use.

Beer isn't new in China. Archaeological evidence indicates beer-type alcoholic drinks were produced in some villages as early as 7000 BC. Those brews were important in ancestral worship and other cultural rituals, and "huangjiu" yellow wine was replaced with beer two millennia ago.

China is the largest beer market in the world, with more than 500 breweries. Production increased by 29 percent in the five years to 2011 and reached an all-time high of 50 billion liters for the first time in 2011, according to a 2012 study by Mintel, the international market intelligence group. The US ranked second with 24 billion liters.

Beer in China

China's beer market grew 63 percent in terms of value over the same five-year period to reach a total market value of 454 billion yuan in 2011, with the average value per liter of beer sold rising 27 percent since 2007. That trend indicates significant development toward Chinese consumers drinking higher-value beer products, Mintel said.

Nevertheless, educating the public on what exactly craft-beer culture is about remains a big hurdle, say China's craft-brew stakeholders.

"For an entire society weaned on [industrial lagers like] Yanjing and Tsingtao, it's a huge challenge to tip the scales of this kind of market domination," said Jacob Wickham, co-founder and president of the Beijing Homebrewing Society. "Education and appreciation for real beer is necessary to help fuel China's craft-beer revolution."

The China Craft Brewers Association was formed to establish a structured networking framework, assistance in importing raw materials, and to help organize beer festivals.

To give craft beer greater exposure, it will be featured at a number of beer festivals. The second annual Shanghai Beer Week will run May 17-26; the second annual Beijing Craft Beer Festival will occur June 22-23 and the 15th annual China International Beer Festival in Dalian, Liaoning province, will be held June 26-August 11.

The association also helps connect brewers for collaborations at one another's breweries.

"I think most brewers like to help out one another when in a pinch for ingredients or even troubleshooting some issues they might be experiencing," Jordan said. "I find the openness of brewers to be unique and often people are surprised by this."

In 2012, Boxing Cat and Beijing's Great Leap Brewing collaborated after attending San Diego's Craft Brewing Conference. Together they produced Yunnan Amber after a Beijing-based tea consultant recommended the brewers infuse their beer with dianhong tea - a strong black tea with a floral aroma - similar to tea from India's Assam region.

"We all have our own little house secrets regarding our beers, but we're very open in general," Jordan said. "Most people that have a passion for craft beer want to share that passion with others and help raise awareness for craft beer."

Carl Setzer, Great Leap's brew master and co-founder, said people come in every week and talk about how they would like to set up a microbrewery. Once they see how much work it takes, both in navigating the bureaucracy and actual physical labor, they ultimately decide otherwise, he said.

After Great Leap became Beijing's first craft brewery in 2010, Slow Boat Brewery opened shortly after in 2011. This weekend, Great Leap is scheduled to open its second location in Beijing as a full-service brew pub.

Additionally, the former home brewers of Jing A craft beers moved into The Big Smoke in April and are building their first microbrewery inside the American style restaurant in Beijing. The official English name is the Capital Brewing Co, and the founders plan to have their taps flowing for the public by the end of May.

'The same sandbox'

In Shanghai, after Boxing Cat opened in 2008 and established a second location in 2009, three more craft breweries joined the community, including The Brew at Kerry Hotel, Pudong; Shanghai Brewery, which also has two locations, and Dr Beer.

"Both cities are massive and we're all capable of playing together in the same sandbox and having our own piece of the pie," Jordan said. "In the end, we need to work together to educate people about flavorful beer and promote our little industry as one solid unit."

Lending support to the movement's solidarity, Hops Magazine - the only publication in China dedicated exclusively to beer - was established two years ago, and China's first do-it-yourself guide for home brewers, Get Your Own Brew, was published by Nanjing-based microbrewer Gao Yan in 2011.

Mike Sherretz was the first person in China to establish a full-fledged homebrew supply store, based in Shanghai.

"Beer is a challenge to source and make in China," Sherretz said. "The Chinese system does not tell you what you can do or how to do things, like importing goods. It only tells you what you can't do; and these [rules] are changing all the time."

Sherretz said sourcing ingredients and supplies is a hassle because China's ever-changing policies and rules make everything open to interpretation. For instance, some items are easily imported to some ports, but not allowed at others. Several licenses are required to import brewing supplies, and many are only good for one shipment or six months.

Sherretz said the quality and reliability of purchasing supplies off Taobao.com - China's equivalent to Amazon.com - remains questionable. Fakes still abound, he said, although the government is cracking down.

"There is a maze of rules and obstacles to work around," Sherretz said. "China has a different way of doing things and many times it is not at all transparent."

The rules

Under current law, bottled beer produced in China won't meet quality-control standards for distribution if it tests positive for yeast or any other microbiologicals. Bottled beer must be filtered and/or pasteurized, stripping it of yeast, which destabilizes or removes flavors the brewer intended for the finished beer.

Kegged beer isn't held to the same standard. Any licensed restaurant or microbrewery can produce beer on site , and some licenses allow brewing off-site for distribution to other outlets run by a business.

"Finding a way to coexist and remain honest with high integrity remains a challenge," Wickham said.

Another area that concerns Sherretz is home brewers who choose to supply restaurants and bars with their products without following food-safety regulations.

"I am worried these mavericks will cause the government to get involved and destroy the whole home-brewing scene," Sherretz said. "I see this as 'going commercial,' and thus they should follow the regulations that commercial food producers have to follow."

Over-saturating the market with low-quality products that misrepresent and mis-educate new consumers about the art of hand-crafted beer also concerns Lee Tseng, Boxing Cat's managing partner and co-founder.

Tseng also said he would like importers to push the quality of the craft-beer brands they carry to help the industry move forward.

US craft-beer exports hit a record high in 2010 of $546,000 and overall sales quintupled in five years from $91,000 in 2005, according to the US Department of Agriculture.

Figures aren't yet available for China's craft-brew industry production and sales.

"Growing the Chinese market is our first and foremost responsibility at this point," Setzer said. "We have plans to export our beer to the US in the future, but only after we have left our mark in China."

After facing a number of obstacles, including the shutting down of his three-year-old Oktoberfest Brewery, Gao Yan, the home brewing how-to author and founder of Nanjing Craft Brewing Co, is ready to bottle his craft beer.

Gao said China's fledgling craft-brewing community began to suffer in 2008 after the government tightened food-safety standards and required all breweries to adhere to strict structure and management codes. By 2010, the government had banned new breweries with production capacities under 50,000 tons, which eventually affected the Oktoberfest Brewery in 2011. Nevertheless, Gao picked his business right back up.

"We are aiming at the global market, hoping to launch the first China brewed craft beer in the world market," Gao said. "From package designs to taste designs, I insist the beer to be Chinese."

Over the years, Gao has developed many beer styles using local ingredients, such as jasmine flower, oolong tea, sweet yam, Chinese dates and Tibetan barley. Now Gao is launching the first bottled craft beer in China with a 230-hectoliter (196 barrels) batch of his pilot product, the Baby IPA, under the brand name "Master Gao". He is using a contracted brewery, the Qingdao Qingli Beer Co, to help his business pass China regulations without losing its quality values.

Gao also has signed up distributors in nine major Chinese cities: Beijing, Shanghai, Nanjing, Qingdao, Shenzhen, Chengdu, Xi'an, Tianjin and Zhengzhou.

'Still looking'

"Gao's announcement of the distribution of his Baby IPA is a positive step towards progress for all craft breweries in China," Setzer said.

In addition to offering his craft beer through distribution, Gao plans to open five microbreweries this year, starting in Zhengzhou and followed by Xi'an, Nanjing, Shenzhen and Beijing.

Gao also is building a new website, www.p9j.cn, to further encourage the home-brewing and craft-beer revolution in China. The website will serve as a platform for craft brewers and beer lovers in China to communicate regularly.

"It is an amazing opportunity to be at the forefront of a craft beer revolution," said The Brew's Mickelson. "To see this [movement] expand rapidly while playing a key part in it is going to be extremely rewarding."

Nevertheless, China's craft-beer revolution still has a long way to go. That may be exemplified by the supplementary note that Oakley and Williams added on April 12 to their help-wanted ad posted in February: "Were [sic] Are Still Looking."